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MERGER AND DISPOSITION TRANSACTIONS (Tables) | 9 Months Ended
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Sep. 30, 2021
MERGER AND DISPOSITION TRANSACTIONS [Abstract] |
Purchase Price Calculation | The purchase price of $8,177,614, which represents the consideration transferred in the Merger to stockholders of Brooklyn immediately before the Merger, was calculated based on the fair value of the common stock that those stockholders owned on March 25, 2021, immediately prior to the Merger, because that represented a more reliable measure of the fair value of consideration transferred in the Merger. The purchase price of $8,177,614 was calculated as follows:
Number of shares of common stock owned by Brooklyn stockholders immediately before the Merger |  |  | 1,514,373 |
Multiplied by the fair value per share of common stock (i) |  | $ | 5.40 |
Total purchase price |  | $ | 8,177,614 |
(i) | Based on the closing price per share (post reverse stock split) of the common stock of Brooklyn as reported on the NYSE American stock exchange on March 25, 2021, immediately before the Merger.
Tangible and Intangible Assets Acquired And Liabilities Assumed, Based on Estimated Fair Values | The allocation of the estimated purchase price to the tangible and intangible assets acquired and liabilities deemed to be assumed from Brooklyn, based on their estimated fair values as of March 25, 2021, is as follows:
|  | Historical Balance Sheet of Brooklyn at March 25, 2020 |  |  | Fair Value Adjustment to Brooklyn Pre-Merger Assets |  |  | Purchase Price Allocation Pro Forma Adjustment |
Cash and cash equivalents |  | $ | 147,728 |  |  | $ | - |  |  | $ | 147,728 |
Accounts receivable |  |  | 102,517 |  |  |  | - |  |  |  | 102,517 |
Prepaid expense and other current assets |  |  | 329,596 |  |  |  | - |  |  |  | 329,596 |
Property and equipment, net |  |  | 1,015,370 |  |  |  | - |  |  |  | 1,015,370 |
Software development costs |  |  | 1,296,460 |  |  |  | (368,460 | ) |  |  | 928,000 |
Customers |  |  | - |  |  |  | 548,000 |  |  |  | 548,000 |
Trade name |  |  | - |  |  |  | 299,000 |  |  |  | 299,000 |
Accounts payable, accrued liabilities and other current liabilities |  |  | (3,781,173 | ) |  |  | - |  |  |  | (3,781,173 | )
Net assets acquired, excluding goodwill |  | $ | (889,502 | ) |  | $ | 478,540 |  |  | $ | (410,962 | )
Total consideration |  | $ | 8,177,614 |  |  |  |  |  |  |  |  |
Net assets acquired, excluding goodwill |  |  | (410,962 | ) |  |  |  |  |  |  |  |
Goodwill |  | $ | 8,588,576 |  |  |  |  |  |  |  |  |
Disposition Details | On March 26, 2021, Brooklyn sold its rights, title and interest in and to the assets relating to the business it operated prior to the Merger to eGames.com in exchange for a purchase price of $2,000,000 and assumption of specified liabilities relating to that business. The sale was completed in accordance with the terms of the Asset Purchase Agreement. Details of the Disposition are as follows:
Proceeds from sale: |  |  |
Cash |  | $ | 132,055 |
Escrow |  |  | 50,000 |
Assume advance/loans |  |  | 1,700,000 |
Interest on advance/loans |  |  | 67,945 |
Carrying value of assets sold: |  |  |  |
Cash and cash equivalents |  |  | (13,461 | )
Accounts receivable |  |  | (75,153 | )
Prepaids and other current assets |  |  | (123,769 | )
Property and equipment, net |  |  | (1,013,950 | )
Software development costs |  |  | (927,368 | )
Customers |  |  | (548,000 | )
Trade name |  |  | (299,000 | )
Goodwill |  |  | (8,588,576 | )
Other assets |  |  | (103,173 | )
Liabilities transferred upon sale: |  |  |  |
Accounts payable and accrued expenses |  |  | 113,156 |
Obligations under finance leases |  |  | 16,676 |
Lease liability |  |  | 25,655 |
Deferred revenue |  |  | 54,803 |
Other current liabilities |  |  | 148,987 |
Transaction costs |  |  | (265,000 | )
Total loss on sale of assets |  | $ | (9,648,173 | )
Pro Forma Financial Information | The following unaudited pro forma financial information summarizes the results of operations for the nine months ended September 30, 2021 and 2020 as if the Merger and the Disposition had been completed as of January 1, 2020. Pro forma information primarily reflects adjustments relating to the reversal of transaction costs. Assuming that the Merger and the Disposition had been completed as of January 1, 2020, the transaction costs would have been expensed in the prior period.
|  | Nine months ended September 30, |
|  | 2021 |  |  | 2020 |
Net loss attributable to common stockholders |  | $ | (113,850,769 | ) |  | $ | (5,080,609 | )
Basic and diluted net loss per share attributable to common stockholders |  | $ | (2.82 | ) |  | $ | (0.29 | )
Fair Value of Asset Acquired | The resulting fair value of the asset acquired is as follows:
| Shares Issued |  | Fair Value Per Share |  |  | Fair Value of Consideration |
Cash paid |  |  |  |  |  | $ | 22,882,181 |
Cash acquired |  |  |  |  |  |  | (28,573 | )
Unrestricted shares |  |  | 3,644,540 |  |  | $ | 10.05 |  |  |  | 36,627,627 |
Restricted shares |  |  | 3,377,690 |  |  |  | 6.53 |  |  |  | 22,056,316 |
Total fair value of consideration paid |  |  |  |  |  |  |  |  |  |  | 81,537,551 |
Less amount of cash paid for NoveCite investment |  |  |  |  |  |  |  |  |  |  | (1,000,000 | )
Fair value of IPR&D acquired |  |  |  |  |  |  |  |  |  | $ | 80,537,551 |

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